Dear Shareholders,
It gives me immense pleasure to share the performance of Intellect Design Arena for the year 2015-16. During the year your company has grown 33 per cent in revenue with operating margins at 52 per cent.
Since the technology products sector is new to the Indian share market, I would like to explain the opportunities and risks associated with your business.
The opportunities are as follows-
1
Opportunity #1 - Revenue Model: A technology product business is based on four streams of revenue - Product License Fee, Annual Maintenance Fee, Implementation Fee, and Support/Upgrade Fee. These revenue streams enable the business to generate over 50 per cent operating margins with a potential to grow to 60 per cent.
2
Opportunity # 2 - Market Size: Since Banking and Insurance are global businesses, Intellect products can be sold globally, with minor modifications. This ensures a large market size for growth.
3
Opportunity #3 - Digital Wave: Intellect spotted the Digital wave in 2011, much earlier than the market and invested in creating a unique Enterprise Digital Platform for delivering complete Digital 360 solutions.
4
Opportunity #4 - Largest Product Suite: Intellect is the only enterprise in the world covering the complete range of banking requirements. More than 12 product suites have been developed using SOA and Digital technologies. These include Digital Core Banking; Digital Transaction Banking; Digital Lending with Origination and Debt Management; Credit Card management; Wealth Management; One Market suite; One Treasury suite; One Liquidity Risk Management; Payments Services hub; Central Banking; Global Liquidity Management and True Omni-channel Digital Face. Intellect also has complete Digital Distribution and Underwriting Workstation suites for Insurance segments.
5
Opportunity #5 - Referenceability in Advanced markets: Intellect products are implemented in advanced and rapidly growing markets like US, UK, Canada, Australia, Spain, Sweden, Chile, Germany, and Japan. Intellect drives over 45 per cent revenues from these markets.
Besides such opportunities, I would also like to highlight the associated risks with a technology product company and how we are mitigating them.
1
Risk #1 - Product Failure Risk: Technology products come with the inherent risk of failure. Your company is mitigating these risks by having 14 Product suites instead of just one Product.
2
Risk #2 - Leadership: technology product business depends on highly passionate and knowledgeable experts for agenda setting. Intellect has organised its business around five leadership teams and Businesses - iGTB led by Manish Maakan, iGCB led by Jaideep Billa, iRTM led by Venkatesh Srinivasan, Intellect SEEC led by Pranav Pasricha and iPay led by Rajesh Saxena. All the five leaders have hand-picked their teams of technical and business experts who have have been groomed internally, or come from Competition and large financial institutions.
3
Risk #3 - Technology Obsolescence: The speed of change in technology keeps the CEOs awake at night. Intellect has built the culture of Design Thinking, which enables Intellect product designers to observe patterns and trends much earlier and craft the solutions of tomorrow. To stay ahead, to beat technology obsolescence with Design Thinking, Intellect commissioned the first Design Center - 8012 FT, in March 2013 for Digital Transformation. Our R&D team continuously works on
latest technologies like Digital 360, Natural Language Processing, Artificial Intelligence, Big Data and smart search technologies to integrate and build solutions leveraging the strength around these with our Products.
4
Risk #4 - Unpredictable Quarters: This risk is real and Intellect has thus far been unable to mitigate this risk. Typical deal size can vary from Rs. 5 crores to Rs. 100 crores. These deals take between 12 to 18 months for shaping up and a further 9 to 12 months in closing the contract, when revenues can be booked. Your company is still learning this art.
Even as we grapple with the risks, we are very excited about the early successes from high-potential technologies that have emerged out of the Intellect
product stables. We are confident that tapping into these rich seams will yield high results and power leadership position in the respective spaces.
1
Early Success #1 - Digital Transaction Banking: The need for integrated transaction banking products have been on the rise across the globe, particularly in the Asia Pacific and Middle East regions. In addition to offering robust solutions for payments, supply chain and trade finance, liquidity, or cash management, Digital Transaction Banking also invites the customer to take a holistic look at the channels on which these products are experienced. With iGTB's award-winning CBX, banks now have a solution that allows delivering of all the products and back office capabilities without the need for explicit adaption to each new channel.
2
Early Success #2 - Central Banking: Intellect's Quantum Central Banking Solution has made a tremendous impact as the only exclusive suite for Central Banks. Not only are we creating traction in new territories in Europe and Africa, we have enhanced our existing relationships, particularly with the Reserve Bank of India. For the second consecutive year, Intellect has been given a Central Banking Award. This year, we have been named as 'Payments Provider of the Year', for our advanced capabilities and record-breaking turnaround time for the RBI.
3
Early Success #3 - Intellect Risk Analyst: A powerful product that combines Contextual Artificial Intelligence, Machine Learning, Big Data, Cloud Computing and Natural Language Processing to create the most advanced underwriting risk assessment tool in the industry. It applies business-specific underwriting rules and risk predictions to thousands of data sources and deep web searches. The result is a highly intuitive and interactive dashboard that summarizes everything an underwriter needs to know about a risk in minutes.
4Early Success #4 - Intellect OneLRM: This specialized product positions us strategically in the specialist segment of Basel III compliance and high-end, high-volume, real-time risk management. OneLRM has been met with high interest among Treasurers and Chief Risk Officers. The unique three-pronged value proposition - Funding Brain, Omni channel digital visualization and end-to-end fully integrated confirmation and collateral management system keeps as the center focus the BCBS 248 Intraday Liquidity Management module.
Through this Annual report, I also want to introduce our leadership of over 110 leaders who power various businesses, driving the opportunities and mitigate risks therein. That is why we titled this report 'Intellect is a business of Intellect' of its leaders.
At the time of listing, we stated that Intellect will double its revenues from Rs. 6 billion to Rs. 12 billion by March 2018. On behalf of Intellect Team, I want to assure you that we are on course and confident of achieving this target.
